CitroTech Inc. 10-Q

Item 1. Financial Statements General Enterprise Ventures, Inc. Consolidated Balance Sheets (Unaudited) September 30, December 31, 2023 2022 Assets Current Assets Cash $ 565,867 $ 55,434 Prepaid expenses 14,830 240 Accounts receivable 182,308 - Inventory 184,678 114,645 Total Current Assets 947,683 170,319 Intangible assets 4,195,353 4,195,353 Operating lease right-of-use asset 148,974 39,367 Equipment, net 5,907 4,547 Total Assets $ 5,297,917 $ 4,409,586 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ 62,156 $ 87,398 Promissory note 120,000 - Convertible notes payable 54,000 35,000 Due to related parties 1,407,681 899,153 Operating lease liability - current portion 78,250 39,367 Total Current Liabilities 1,722,087 1,060,918 Operating lease liability 70,924 - Total Liabilities 1,793,011 1,060,918 Stockholders' Equity Convertible Series A Preferred Stock, par value $ 0.0001 , authorized 10,000,000 shares, 10,000,000 shares issued and outstanding 1,000 1,000 Convertible Series C Preferred Stock, par value $ 0.0001 , authorized 5,000,000 shares, 2,273,499 and 950,000 issued and outstanding, respectively 227 95 Common Stock par value $ 0.0001 , authorized 1,000,000,000 shares, 97,545,388 and 93,945,388 shares issued and outstanding, respectively 9,755 9,395 Additional paid-in capital 72,427,996 62,719,578 Common Stock to be issued -500,000 shares 180,000 - Accumulated deficit ( 69,114,072 ) ( 59,381,400 ) Total Stockholders' Equity 3,504,906 3,348,668 Total Liabilities and Stockholders' Equity $ 5,297,917 $ 4,409,586 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 3 Table of Contents General Enterprise Ventures, Inc. Consolidated Statements of Operations (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenue $ 174,710 $ 19,033 $ 258,660 $ 60,501 Cost of revenue 39,883 1,798 58,630 1,798 Gross Profit 134,827 17,235 200,030 58,703 Operating Expenses General and administration 146,562 202,441 361,028 283,282 Management stock-based compensation 180,000 - 180,000 2,100,000 Stock-based professional fees - related party 8,640,000 - 8,640,000 - Professional fees 189,508 111,783 749,155 334,249 Total operating expenses 9,156,070 314,224 9,930,183 2,717,531 Loss from Operations ( 9,021,243 ) ( 296,989 ) ( 9,730,153 ) ( 2,658,828 ) Other Expense Interest expense ( 1,760 ) ( 76 ) ( 2,519 ) ( 76 ) Total other expense ( 1,760 ) ( 76 ) ( 2,519 ) ( 76 ) Loss from continuing operations before taxes ( 9,023,003 ) ( 297,065 ) ( 9,732,672 ) ( 2,658,904 ) Provision for income taxes - - - - Loss from continuing operations $ ( 9,023,003 ) $ ( 297,065 ) $ ( 9,732,672 ) $ ( 2,658,904 ) Discontinued operations: Income from discontinued operations $ - $ - $ - $ 13,016 Loss on disposition of digital currency and digital currency assets - - - ( 2,030 ) Income from discontinued operations, net of tax $ - $ - $ - $ 10,986 Net Loss $ ( 9,023,003 ) $ ( 297,065 ) $ ( 9,732,672 ) $ ( 2,647,918 ) Loss from continuing operations per Common Share – Basic and diluted $ ( 0.09 ) $ ( 0.00 ) $ ( 0.10 ) $ ( 0.05 ) Income from discontinuing operations per Common Share – Basic and diluted $ - $ 0.00 $ - $ 0.00 Net loss per common share – Basic and diluted $ ( 0.09 ) $ ( 0.00 ) $ ( 0.10 ) $ ( 0.05 ) Basic and Diluted Weighted Average Number of Common Shares Outstanding 97,545,388 93,945,388 96,366,267 51,575,425 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 4 Table of Contents General Enterprise Ventures, Inc. Consolidated Statements of Change in Stockholders’ Equity (Deficit) (Unaudited) For the Three and Nine Months ended September 30, 2023 Convertible Series A Convertible Series C Preferred Stock Common Stock Additional Total Stockholders' Preferred stock Preferred stock Common Stock to be to be Paid-In Accumulated Equity Shares Amount Shares Amount Shares Amount issued issued Capital Deficit (Deficit) Balance - December 31, 2022 10,000,000 $ 1,000 950,000 $ 95 93,945,388 $ 9,395 $ - $ - $ 62,719,578 $ ( 59,381,400 ) $ 3,348,668 Common stock issued for services - - - - 300,000 30 - - 86,820 - 86,850 Net loss - - - - - - - - - ( 353,611 ) ( 353,611 ) Balance - March 31, 2023 10,000,000 $ 1,000 950,000 $ 95 94,245,388 $ 9,425 - - $ 62,806,398 $ ( 59,735,011 ) $ 3,081,907 Subscription received - shares to be issued - - - - - - 179,600 - - - 179,600 Common stock issued for services - - - - 300,000 30 - - 59,970 - 60,000 Conversion of Convertible Series C Preferred stock in Common stock - - ( 150,000 ) ( 15 ) 3,000,000 300 - - ( 285 ) - - Net loss - - - - - - - - - ( 356,058 ) ( 356,058 ) Balance - June 30, 2023 10,000,000 1,000 800,000 80 97,545,388 9,755 179,600 - 62,866,083 ( 60,091,069 ) 2,965,449 Common stock to be issued - management - - - - - - - 180,000 - - 180,000 Issuance Series C Preferred stock related to subscription - - 74,833 7 - - ( 179,600 ) - 179,593 - - Issuance Series C Preferred stock in cash - - 198,666 20 - - - - 727,980 - 728,000 Issuance Series C Preferred stock for services -related party - - 1,200,000 120 - - - - 8,639,880 - 8,640,000 Contribution inventory - related party - - - - - - - - 14,460 - 14,460 Net loss - - - - - - - - - ( 9,023,003 ) ( 9,023,003 ) Balance - September 30, 2023 10,000,000 $ 1,000 2,273,499 $ 227 97,545,388 $ 9,755 $ - $ 180,000 $ 72,427,996 $ ( 69,114,072 ) $ 3,504,906 5 Table of Contents For the Three and Nine Months ended September 30, 2022 Convertible Series A Convertible Series C Additional Total Stockholders' Preferred stock Preferred stock Common Stock Paid-In Accumulated Equity Shares Amount Shares Amount Shares Amount Capital Deficit (Deficit) Balance - December 31, 2021 10,000,000 $ 1,000 - $ - 22,945,388 $ 2,295 $ 56,417,418 $ ( 56,473,572 ) $ ( 52,859 ) Debt forgiveness - former related party - - - - - - 9,355 - 9,355 Net loss - - - - - - - ( 29,750 ) ( 29,750 ) Balance - March 31, 2022 10,000,000 1,000 - - 22,945,388 2,295 56,426,773 ( 56,503,322 ) ( 73,254 ) Shares issued for acquisition of Mighty Fire Breakers - - 1,000,000 100 - - 4,199,900 - 4,200,000 Conversion of Convertible Series C Preferred stock of Common stock - - ( 50,000 ) ( 5 ) 1,000,000 100 ( 95 ) - - Stock based compensation - - - - 70,000,000 7,000 2,093,000 - 2,100,000 Net loss - - - - - - - ( 2,321,103 ) ( 2,321,103 ) Balance - June 30, 2022 10,000,000 1,000 950,000 95 93,945,388 9,395 $ 62,719,578 ( 58,824,425 ) 3,905,643 Net loss - - - - - - - ( 297,065 ) ( 297,065 ) Balance - September 30, 2022 10,000,000 $ 1,000 950,000 $ 95 93,945,388 $ 9,395 $ 62,719,578 $ ( 59,121,490 ) $ 3,608,578 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 6 Table of Contents General Enterprise Ventures, Inc. Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2023 2022 Cash Flows from Operating Activities: Net loss $ ( 9,732,672 ) $ ( 2,647,918 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 8,966,850 2,100,000 Loss on disposition of digital currency and digital currency assets - 2,030 Impairment loss on digital assets - 6,125 Non-cash lease expense 52,058 29,647 Depreciation and amortization 871 15,326 Changes in operating assets and liabilities: Accounts receivable ( 182,308 ) - Inventory ( 70,033 ) ( 114,413 ) Contribution inventory - related party 14,460 - Digital currency - 374 Prepaid expense ( 14,590 ) ( 5,190 ) Related party advances funding operating expense 222,529 97,819 Accounts payable and accrued liabilities ( 25,243 ) 34,469 Operating lease liabilities ( 51,858 ) ( 25,000 ) Net Cash used in Operating Activities ( 819,936 ) ( 506,731 ) Cash Flows from Investing Activities: Purchase of equipment ( 2,231 ) ( 5,350 ) Net Cash used in Investing Activities ( 2,231 ) ( 5,350 ) Cash Flows from Financing Activities: Proceed from convertible note - 35,000 Proceeds from loan - related party 305,000 584,484 Repayment of loan- related party - ( 55,720 ) Proceed from issuance Series C Preferred Stock 907,600 - Proceeds from promissory note 120,000 - Net Cash provided by Financing Activities 1,332,600 563,764 Change in cash 510,433 51,683 Cash, beginning of period 55,434 5,469 Cash, end of period $ 565,867 $ 57,152 Supplemental Disclosure Information: Cash paid for interest $ - $ - Cash paid for taxes $ - $ - Non-Cash Financing Disclosure: Issuance of common stock for services $ 146,850 $ - Issuance of Series C Preferred C stock for acquisition of Mighty Fire Breakers $ - $ 4,200,000 Common stock issued upon conversion of Preferred C stock $ 300 $ 1,000 Debt forgiveness - related party $ - $ 9,355 Reclassification of due to related party to convertible note $ 19,000 $ - Contribution inventory - related party $ 14,460 $ - Issuance Series C Preferred stock for services -related party $ 8,640,000 $ - Initial recognition of right-of-use assets and lease liabilities obtained $ 161,665 $ - See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 7 Table of Contents General Enterprise Ventures, Inc. Notes to Unaudited Consolidated Financial Statements September 30, 2023 Note 1 – Nature of Operations and Going Concern General Enterprise Ventures, Inc., (the “Company” or “GEVI”), was originally incorporated under the laws of the State of Nevada on March 14, 1990. Business We are a fully integrated technology company structured to provide mergers and acquisitions of new and available technology. Through our services, we incubate first-to-market products and help existing companies accelerate their product development within all regulatory requirements. Going Concern The accompanying unaudited interim consolidated financial statements have been prepared (i) in accordance with accounting principles generally accepted in the United States, and (ii) assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated significant income to date. The Company is subject to the risks and uncertainties associated with a business with no substantive revenue, as well as limitations on its operating capital resources. These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. In light of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise capital and generate revenue and profits in the future. Note 2 – Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the unaudited interim financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2022, as filed with the SEC on March 31, 2023. Principles of Consolidation The consolidated financial statements include the accounts of General Enterprise Ventures, Inc., and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain expenses during the reporting period. Actual results could differ from these good faith estimates and judgments. 8 Table of Contents Cash and Cash Equivalents For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company did not have any cash equivalents. The Company had $ 565,867 and $ 55,434 at September 30, 2023 and December 31, 2022, respectively. Share-Based Compensation The Company accounts for employee and non-employee stock awards under ASC 718, Compensation – Stock Compensation, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to nonemployees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Equity grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. For the nine months ended September 30, 2023 and 2022, the Company recorded share-based compensation of $8,966,850 and $2,100,000, respectively. See Note 9 – Stockholders’ Equity for more detail. Inventory Inventories consist of raw materials which are stated at lower cost or net realizable value, with cost being determined on the weighted average method. As of September 30, 2023, and December 31, 2022, the Company held inventories of $ 184,678 and $ 114,645 , respectively. During the nine months ended September 30, 2023, and 2022, the Company recorded cost of goods sold of $ 58,630 and $ 1,798 associated with the cost of inventories sold, respectively. The Company did not write-off any inventories as unsalable during the nine months ended September 30, 2023 and 2022. Property and Equipment Property and equipment are stated at cost. Depreciation is computed on the straight-line method. Currently our assets consist solely of furniture and equipment which we amortize over a useful life of 5 years. Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income. Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. Fair Value of Financial Instruments The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: ● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; ● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and ● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The Company’s financial instruments, including cash, prepaid expenses, accounts receivable, inventory, accounts payable and accrued liabilities, and due to related party, are carried at amortized cost. At September 30, 2023 and December 31, 2022, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. 9 Table of Contents Related Parties The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions. Basic and Diluted Net Loss Per Common Share Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. For the nine months ended September 30, 2023 and 2022, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive. September 30, September 30, 2023 2022 Shares Shares Convertible notes 300,000 194,444 Convertible Series C Preferred Stock 19,382,149 550,183 Revenue We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers . The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. Our revenues currently consist of products used for lumber products for fire prevention. Revenue is recognized at a point in time that is which the risks and rewards of ownership of the products transfer from the Company to the customer. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make the required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable that the receivable will not be recovered. During the nine months ended September 30,2023 and 2022, the Company had no allowance for doubtful accounts. Intangible Assets Intangible assets with an indefinite life are not amortized and are tested for impairment annually or more frequently if events or changes in circumstances indicate that they might be impaired. Intangible assets with finite lives are initially recorded at cost and amortized on a straight-line basis over the estimated economic useful lives of the respective assets. Acquired intangible assets from business combinations and asset acquisitions are recognized and measured at fair value at the time of acquisition. Those assets represent assets with finite lives and are further amortized on a straight-line basis over the estimated economic useful lives of the respective assets. 10 Table of Contents Note 2 – Discontinued Operations Crypto mining On April 1, 2022, the Company implemented a plan to divest its crypto mining operations to focus its resources on Mighty Fire Breaker, LLC (“MFB”) acquisition (see Note 4). The Company recognized a loss of $ 2,030 from the disposition of its crypto mining operations, which consisted of the relinquishment of the digital currency assets in exchange for settlement of the related party note payable associated with the acquisition of the equipment. The following is a summary of discontinued operations for the period ended April 1, 2022: April 1, 2022 Revenue $ 46,976 Cost of revenue 27,835 Gross Profit 19,141 Operating expenses: Impairment loss 6,125 Total operating expenses 6,125 Income from discontinued operations $ 13,016 Note 3 – Equipment, net At September 30, 2023 and December 31, 2022, equipment consisted of the following: September 30, December 31, 2023 2022 Cost: Furniture and equipment $ 7,582 $ 5,350 Less: accumulated depreciation ( 1,675 ) ( 803 ) Equipment, net $ 5,907 $ 4,547 During the nine months ended September 30, 2023 and 2022, the Company recorded a depreciation of $871 and $267, respectively. Note 4 – Acquisition On April 13, 2022, the Company acquired Mighty Fire Breaker LLC ("MFB”), in exchange for 1,000,000 shares of Series C Convertible Preferred Stock. MFB was formed to hold intellectual property pertaining to the fire suppression segment of the environmental industry, which included patents and patents pending, MFB has 19 patents centered around its CitroTech MFB 31 Technology for the prevention and spread of wildfires. Its core products can be used for lumber treatments for fire prevention. It has been widely tested and is currently in testing at 3 major us government agencies. When CitroTech Science is sprayed and applied it takes flammable fuels like dry native vegetation and wood and makes them noncombustible. 11 Table of Contents The following table summarizes the consideration paid for MFB and the amounts of the assets acquired, and liabilities assumed at the acquisition date of April 13, 2022: Consideration: Convertible Preferred C stock $ 4,200,000 Assets acquired and liabilities assumed: Intangible assets $ 4,195,353 Operating lease right-of-use assets 81,967 Operating lease liabilities ( 77,320 ) Note 5 – Intangible Assets The Company has capitalized the costs associated with acquiring the intellectual property of MFB at a value of $ 4,195,353 as of September 30, 2023, and December 31, 2022, respectively. The amount capitalized consisted of a portion of the fair value of 1,000,000 shares of Convertible Preferred C stock valued at $ 4,200,000 . During the nine months ended September 30, 2023, no additional costs met the criteria for capitalization as an intangible asset. Note 6 – Lease On April 13, 2022, the Company obtained a lease agreement for period of eighteen months to be expired on August 31, 2023. On July 13, 2023, the Company entered into an amendment to lease agreement for a two-year term. In accordance with ASC 842, the Company recognized operating lease ROU assets and lease liabilities as follows: The following summarizes right-of use asset and lease information about the Company’s operating lease as of September 30, 2023: Nine Months Ended September 30, 2023 2022 Lease cost: Operating lease cost $ 58,482 $ 25,000 Other information: Cash paid for operating cash flows from operating leases $ 58,232 $ 31,500 Right -of-use assets obtained upon acquisition $ 161,665 $ 81,967 Weighted-average remaining lease term - operating leases (year) 1.84 0.92 Weighted-average discount rate — operating leases 6.5 % 5.5 % September 30, December 31, 2023 2022 Operating lease ROU asset $ 148,974 $ 39,367 September 30, December 31, 2023 2022 Operating lease liabilities: Current portion 78,250 $ 39,367 Non-current portion 70,924 - $ 149,174 $ 39,367 12 Table of Contents Future minimum lease payments under operating leases at September 30, 2023 were as follows: Year ended December 31, 2023 (excluding the nine months ended September 30, 2023) $ 21,198 2024 85,792 2025 50,862 Thereafter - 157,852 Less: Imputed interest ( 8,678 ) Operating lease liabilities $ 149,174 Note 7 – Convertible Note On September 30, 2022, the Company entered into a convertible note agreement for the amount of $ 54,000 , with term of six (6) months from the date of receipt of the funds, at interest rate of 2 % per annum, currently the note is in default. At the sole option of the Lender, all or part of unpaid principal then outstanding may be converted into shares of common stock at any time starting from 24 hours after payment at a fixed conversion price of $ 0.18 per share. As of September 30, 2023, following is the summary of funds received from the lender: Principal Interest Payment date Amount Maturity date Rate Balance August 11, 2022 $ 18,000 February 11, 2023 2 % 18,000 September 2, 2022 $ 17,000 March 2, 2023 2 % 17,000 April 1, 2023 $ 19,000 Due on demand 2 % 19,000 Total Convertible notes $ 54,000 Current portion ( 54,000 ) Long -term portion $ - On June 9, 2022, the lender paid $ 19,000 to the Company and it was recorded as an advance from a related party. On April 1, 2023, an amount owing to related party was reclassified to convertible note for $19,000. During the nine months ended September 30, 2023 and 2022, the Company recognized $ 1,035 and $ 76 interest, respectively. As of September 30, 2023, and December 31, 2022, the Company owed principal of $ 54,000 and $ 35,000 and accrued interest of $ 1,291 and $ 255 , respectively. Note 8 – Promissory Note On June 7, 2023, the Company entered into a promissory note agreement for the amount of $ 120,000 , in terms of twelve (12) months and interest rate of 5 % per annum. The Company received $ 120,000 from the lender on July 3, 2023. During the nine months ended September 30, 2023, the Company recognized $ 1,483 interest. As of September 30, 2023, the Company owed principal of $ 120,000 and accrued interest of $ 1,483 . Note 9 – Stockholders’ Equity On June 29, 2023, the Board of Directors and stockholders of the Company approved an amended and restated certificate of incorporation effective a change in par value from $0.001 to $0.0001 per share of Common and Preferred Stock . All issued and outstanding Common and Preferred Stock contained in the consolidated financial statements have been retroactively corrected to reflect this change in par value for all periods presented. 13 Table of Contents Preferred Shares The Company’s preferred shares consist of the following: Series A Preferred Stock The Company has authorized 10,000,000 shares of Convertible Series A Preferred Stock, par value $ 0.0001 . The Series A Preferred Stock are convertible into common stock of the Corporation at a conversion rate of one thousand ( 1,000 ) shares of common stock and entitled to one thousand (1,000) votes of common stock for each share of Series A Preferred Stock. The holders of the Convertible Series A Preferred Stock shall not be entitled to receive dividends. Issued and outstanding Convertible Series A Preferred stock as of September 30, 2023, and December 31, 2022, was 10,000,000 . Series C Preferred Stock The Company has authorized 5,000,000 authorized shares of non-voting Convertible Series C Preferred Stock, par value $ 0.0001 . The Series C Preferred Stock shares are convertible into common stock of the Corporation at a conversion rate of one ( 1 ) Preferred C share for twenty (20) shares of common stock. Issued and outstanding Convertible Series A Preferred stock as of September 30, 2023 and December 31, 2022, were 2,273,499 and 950,000 , respectively. On April 13, 2022, the Company’s board of directors approved the issuance of 1,000,000 Convertible Series C Preferred Stock, with a value of $ 4,200,000 as consideration for the acquisition of the entity and intellectual property (see note 4). The holder may exercise shares after an initial lock up period of six (6) months following the date of the agreement and may only exchange a maximum of four (4) million shares in a twelve (12) month period and may not hold or beneficially hold more than 10% of outstanding at any time. On June 7, 2022, the holder of the Convertible Series C Preferred Stock converted 50,000 shares of the Company’s Series C Preferred Stock into 1,000,000 shares of the Company’s common shares. On April 5, 2023, the holder of the Convertible Series C Preferred Stock converted 150,000 shares of the Company’s Series C Preferred Stock into 3,000,000 shares of the Company’s common shares. During the nine months ended September 30, 2023, the Company issued 273,499 shares of Convertible Series C Preferred Stock in connection with subscription agreements signed with investors during the months of May, June and August 2023 at price of $2,40 and $ 4.00 per share for total amount of $ 907,600 . During the nine months ended September 30, 2023, the Company issued 1,200,000 shares of Convertible Series C Preferred Stock to a related party for consulting services rendered to the Company from October 2021 through July 2023. The Company valued the 1,200,000 shares of Convertible Preferred Stock, as if converted to 24,000,000 shares of common stock, using the quoted stock price of the Company’s common stock at approval date (November 1, 2022), resulting in a value of $ 8,640,000 . Common Shares The Company has authorized 1,000,000,000 shares of common stock with a par value of $ 0.0001 . Each common stock entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought. As of September 30, 2023, 70,000,000 shares issued to a member of the board of directors and President of the Company are restricted (the “Restricted Stock Award”) and shall be released only upon the Company achieving gross revenue in each of the calendar years ended December 31, 2023, 2024, 2025 and 2026, of not less than $100,000,000. The holder of the Restricted stock shall be entitled to vote but is not entitled to dividends or disposal. The Company valued the voting rights associated with the awards at $ 2,100,000 which is recorded as stock-based compensation during the year ended December 31, 2022. 14 Table of Contents During the nine months ended September 30, 2023 and 2022, the holder of the Convertible Series C Preferred Stock Converted 150,000 and 50,000 shares of the Company’s Series C Preferred Stock into 3,000,000 and 1,000,000 shares of the Company’s common shares, respectively. During the nine months ended September 30, 2023, the company issued 600,000 shares of common stock for services valued at $ 146,850 . As of September 30, 2023, and December 31, 2022, issued and outstanding Common shares were 97,545,388 and 93,945,388 , respectively. Restricted Stock Award On June 13, 2022, the Company issued a 70,000,000 Restricted Stock Award (“RSA”) to a member of the board of directors and President of the Company. Set out below is a summary of the changes in the Restricted Shares during the nine months ended September 30, 2023: RSA Weighted -Average Grant Price Balance, December 31, 2022 70,000,000 $ 0.03 Granted - - Vested - - Forfeited - - Balance, September 30, 2023 70,000,000 $ 0.03 Common Stock to be Issued On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to each two independent directors for their board services in support of the Company. As of September 30, 2023, the Company has not issued the shares. The Company valued the 500,000 shares of common stock at the market value of the Company’s common stock at approval date for the amount of $ 180,000 . Note 10 – Related Party Transactions During the nine months ended September 30, 2022, our former officer forgave $ 9,355 in accrued salary and the Company recognized it as additional paid-in-capital. During the nine months ended September 30, 2022, as part of the Company’s divestiture of its digital asset operations, a related party forgave loans payable of $ 301,175 in exchange for digital asset equipment with a net book value of $ 276,379 and digital currency intangible assets of $ 26,825 , of which the Company recorded a loss on disposition of $ 2,030 . On June 9, 2022, the Company received $ 19,000 cash from a third party, and it was recorded as an advance from a related party. On April 1, 2023, the Company recognized the error and the amount owing to the related party was reclassified to convertible note related to a lender for $19,000 (see Note 7). During the nine months ended September 30, 2023 and 2022, a related party advanced to the Company an amount of $ 305,000 and $ 584,484 for working capital propose, respectively. During the nine months ended September 30, 2023, and 2022, a related party advanced to the Company an amount of $ 222,529 and $ 97,819 for operating expenses on behalf of the Company, respectively. During the nine months ended September 30, 2023 and 2022, the Company repaid $ 0 and $ 55,720 owing to the loan, respectively. 15 Table of Contents During the nine months ended September 30, 2023 and 2022 the Company paid $ 133,500 and $ 92,000 consulting fee to an entity under common control of a related party and $ 122,500 and $ 59,500 commission to a related party. On October 23, 2021, the Company entered into a consulting agreement with a related party. The consultant shall render to the Company, upon the request of any members of Board of Directors or the President of the Company, consulting services on matters relating to the business affairs of the Company. The agreement shall take effect of the date of agreement and shall terminate upon mutual agreement of the parties. The compensation of consultant is a number of Convertible Series C Preferred Shares which the Board of Directors of the Company may determine at its discretion. On November 1, 2022, the Company’s Board of Directors approved issuance of 1,200,000 shares of Convertible Series C Preferred Stock to consultant - related party for their past consulting services and continuing to July 2023. On September 5, 2023. the Company issued 1,200,000 shares of Convertible Series C Preferred Stock for consulting services rendered to the Company. The Company valued the 1,200,000 shares of Convertible Preferred Stock at $ 8,640,000 . On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to each two independent directors for their board services in support of the Company. As of September 30, 2023, the shares have not been issued, and the Company valued the 500,000 shares of common stock at market price on approval date and accrued $ 180,000 . As of September 30, 2023, and December 31, 2022, the Company was obliged to related parties, for unsecured, non-interest-bearing demand loans with a balance of $ 1,407,681 and $ 899,153 , respectively. Note 11 – Commitments and Contingencies The vendor in the transaction involving MFB is entitled to a ten (10%) percent royalty on gross sales of the MFB family of products. Note 12 – Concentration During nine months ended September 30, 2023 and 2022, customer and supplier concentrations (more than 10%) were as follows: Revenue During the nine months ended September 30, 2023, one customer represented 66 % of our revenue compared to four customers representing 75 % of our revenue for the nine months ended September 30, 2022. Purchases During the nine months ended September 30, 2023, one supplier represented 96 % of our purchase compared to one supplier representing 97 % of our purchase for the nine months ended September 30, 2022. Accounts receivable As of September 30, 2023, one customer represented 100 % of our accounts receivable. As of December 31, 2022, the Company did not record any accounts receivable. Note 13 – Subsequent Events Management has evaluated subsequent events through the date these financial statements were available to be issued. 16 Table of Contents